Condo Owners Association COA

Auditor General's Report on Ontario Condo Industry

Auditor General's Report on Ontario Condo Industry 

 

On December 2020, the Auditor General's office of Ontario announced the results of their review named the "Value-for-Money Audit Condominium Oversight in Ontario - Please see https://www.auditor.on.ca/en/content/annualreports/arreports/en20/20VFM_10condominium.pdf

They stated that the entire condo sector in Ontario was valued at $300 billion dollars using a 2018 assessed value in the approximate amount of $340,000 for about 930 sq ft condo using figures from Statistics Canada.   We will note that this does not reflect prices in the Greater Toronto area (GTA) where prices are substantially higher.  When we consider there are approximately 890,000 condo units in Ontario and about 11,350 Condo Corporations it is crucial that the COA mandate is recognized "to represent and provide leadership to Condominium Owners with a united voice advocating and fostering quality lifestyle, prosperous and sustainable condominium ownership.  

In the last 3 years the data has changed significantly however the  most recent available date is from Statistics Canada for 2018.  If we consider the reports statement that about 57% of condo apartments are owner occupied and possibly 43% are either secondary, rented or vacant properties. the question would be what is this ratio today in 2021.    The COA advocated for a Condo Act Review since their inception March 2010.  In June 2012 the McGuinty Government announced the review however because of Parliamentary changes and the Wynne Government the reforms were somewhat delayed and reforms to the Act were not passed until 2015 at which time the Condominium Management Services Act was also a new piece of important legislation to regulate the condo sector.   The Condominium Authority of Ontario COA was designated in 2017 September as well the Condominium Management Regulatory Authority CMRAO in 2017 November. 

A key point to mention, the Condo Owners Association COA sat on the Condo Act Review and the Home Protection Review for Condominium Managers and Management companies.  We did not support the Ministry of Government and Consumers Services designation of either the CAO or the CMRAO.  The COA felt that the additional cost for Condo Owners is unnecessary and both of these parties would not assist Condo Owners affectively.  Owners are forced to take on an independent challenge of their Board and/or property managers which in turn will compromise and create more disputes for them.   

The Report states that "many of the reforms have still not been implement five years after they were passed".  We agree wholeheartedly agree with the report stating "the existing model for the condo sector does not provide effective consumer protection and does not address the risks that exist for condo owners and buyers".  Key points are identified relating to condo reserve funds both on the resale market and new construction.    Sadly the excessive limitations of the Condo Authority prevent them from investigating misconducts or potential abuses of the Condo boards or non compliance therefore enforcing compliance seems to be somewhat impossible unless it relates to the assessment fee to the Condo Authority.  In 2017 November a fast and inexpensive adjudication under the Condo Authority is known as the Tribunal yet they can only hear disputes on records of the Corporation and any form of dispute mediation is still lost in the wind under the CAO.  Condo Owners have to pay form private mediation and/or arbitration to seek assistance through the courts if their issues relate to condo board governance, accountability, maintenance fees, bullying, irresponsible spending, overpriced refurbishments, anything other than records related inquiries.  The COA confirms that one of the key issues we faced during the Condo Act Review was dispute resolution yet today we still stand with the same problem

The report identifies nearly half of the complaints which is a "key mandates of the Management Regulatory Authority" have not been addressed and related Condo Managers and Management companies are not being inspected.   We highly suggest that all condo owners read page 5/80 relating to increased maintenance fee and excessive monies towards increasing their reserve funds for repairs and replacement.   We have received several reports relating to excessive amounts of monies paid by the Corporation for refurbishments and irregular practice relating to Owners approvals.   This is another issue besides the report identifying hundreds of unlicensed individuals and companies  who are providing condo management services.   The Condo Authority public registry lists 156 companies without licensing as of February 2020 and the Management Regulatory Authority doesn't proactively identify these unlicensed companies or individuals.  In fact less than 1% of more than 3,650 Ontario licensed managers and management companies for a total of only 18 inspections and 6 investigations were carried out in approx. 2 years and some were not full investigations.  

CONDO BOARD MEMBERS
Can you imagine the report identified that 6,420 Directors of Condo Boards, 17% of 37,568 Directors has not completed their training within six months of their appointment, re-election or election date.   The COA has received complaints where Condo Directors who haven't completed their course, step down as an elected board member only to be re-appointed to the Board by the Directors shortly to avoid the training course.   There are 11,354 condo corporations registered in Ontario.

The full report concludes that all parties, the Condo Authority and Condominium Authority Tribunal do not protect Condo Owners sufficiently.  There are several 2015 amendments to the Condominium Act 1998 which are still not in force.   The COA is not happy about the outcome of the Condo Act Review and throughout the process it was not leaning towards protective measures for Condo Owners.  Sadly the participants were largely in favour of condo services trades and created an unbalanced approach of representation. 

 

We urge Condo Owners to read the Report -  Learn more about Condominiums, structure, operations, financials, operating budgets, certainly reserve funds and overall governance and accountability. 

Linda Pinizzotto, COA Founder represented the COA in the Condo Act Review, her strong presence on issues and concerns relating to governance, dispute resolution, financial management, consumer protection, and so on were addressed yet to-date do not have an regulated structure in place.  

On closing we do want to draw your attention to page 30/80 which addresses "Reserve Funds".  There is a process involved with Owners approvals relating to design, materials and cost inclusive of disclosure of the overall Reserve Fund which requires updating regularly as per the condo act.  There are expenditures included and not included in the 30-year time frame which is to be identified by an expert reserve fund study provider.  Replacement of building elevators and parts of the building cladding, windows, electrical systems, balconies and others would not be included in the 30 year time frame for a condo building constructed. The report states "expensive items, like boilers, windows and building cladding, may only require replacement 40 to 50 years after construction, condo boards often do not budget for them in the first 10–20 years.

 

FOR FULL REPORT - PDF 

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